Employee Engagement – Impact on Performance

So you have spent substantial time and energy on recruiting a quality workforce – a massive effort.

After congratulating yourself, you sit back and wait for the results to arrive. But they don’t, or at least that don’t to any great degree. So what went wrong? These are talented people; well recruited; they know what is expected; yet it isn’t working. Well, too often the hard work of recruitment is not followed up by the even harder work of leadership.


Depending on the business and industry, employee expenses are more often than not the largest expense line, often by a long way with employee costs sometimes exceeding 70% of total expenses. If the vehicle fleet represented the same percentage, you would be certain that substantial resources would be dedicated to ensuring the fleet was in tip top condition at all times. This is often not the case with employees – the reasons can be varied, however consider the following[1]:

  • On average 70% of employees are not engaged at work.

  • 60% of an average workforce has no idea what the goals, strategies and tactics of the business are.

  • 75% of people voluntarily leaving their jobs are actually quitting the bosses, not the job.

  • Only 12% of employees actually leave a job for more money.

  • Highly engaged employees are 87% less likely to leave than disengaged co-workers.

There is enough research now completed on employee engagement to confirm a direct correlation between high employee engagement and business performance. Depending on the research house, businesses with high engagement scores (60% and above) achieve a Total Shareholder Return of between 20 – 30% on average compared to less than 10% for the others and negative returns if the engagement score is below 25%. Financial performance aside, high engagement also contributes to low staff turnover, low absenteeism, reduced mistakes, improved sales and, importantly,  higher client engagement as the business is a pleasure to do business with.

So what drives employee engagement?

According to Frederick Herzberg, while writing for the Harvard Business Review, the things that make people satisfied and motivated are different in kind from the things that make them dissatisfied. The demotivating, or environmental factors such as an annoying boss, poor salary or stupid rules can be fixed, however in isolation they will only be seen in the eyes of the employee as removal of an issue, whereas the motivational factors, such as interesting work, challenging environment or increased responsibility can drive engagement.

Is high engagement a holy grail? Substantial research is undertaken on the subject, which is readily available to business leaders, yet why is it that on average 70% of employees are not fully engaged? The reasons will no doubt vary from business to business, however with 70% of the competition disengaged, this can be a real market differentiator that requires minimal effort for a large impact.

Engagement’s Effect on Key Performance Indicators


Here are 5 of the key drivers of employee engagement and what can be done to foster them:

Engagement Driver


An ability to make decisions, make a difference and own the job.


  • Choosing employees that take pleasure in performance.

  • Allocating decision-making discretion.

  • Trust.

Engagement Driver

Effort aligned to business strategy

Clear understanding of what is expected in the role and, more importantly, how this aligns to the business goals.


  • Establishment of a strong communication process (regular and meaningful), particularly in regard to business strategy and changes.

  • Building accountability through a robust performance management process.

  • Sharing the business goals and performance.

Engagement Driver

Teamwork and collaboration

Strong working relationships with co-workers are a must and silos are to be avoided at all costs. The intent is to avoid an “us vs them” culture and deliver a collaborative culture where new ideas are nurtured.


  • The key here is trust and integrity. Employees must trust management to do what it says it will do and employees must trust each other to do the same.

  • Empathy for the welfare and interests of the team goes a long way to building trust.

Engagement Driver


Most employees want to grow and progress in their roles, learn new skills and contribute. A primary reason employees leave is they see better opportunities for growth elsewhere. If provided in their current role there is no reason to leave.


  • Build a learning culture. Training forms a part of this, but so does encouraging external study and mentoring.

  • Establish learning & development plans.

  • Understand the needs and desires of the employee and where possible, foster these in the role.


Engagement Driver

Support & recognition

Last on the list, but one of the most important in the impact it can have. Everyone likes a pat on the back for a job well done; yet it is often neglected in the workplace with mistakes being noticed much more often. While financial recognition may be used, this is usually an annual event. Listening to employees concerns, recognising achievement and appreciating input can be provided regularly.


  • Establish a feedback culture. This can only be led from the top.

  • Regularly seek ideas from the workforce – and act on those worthy.

  • Provide regular feedback on performance – both good and bad. Both are received well if they are delivered with integrity.

  • Recognise good performance – when it happens.

There are few decisions a leader can make which can positively impact as much as improving employee engagement. For the most part it costs little, it feels good and its financial benefits are many.

And the other great benefit is engagement is contagious across the work-force and, more importantly, the client base – and who wouldn’t want highly engaged clients?

nem Partners are experienced in driving engagement. Feel free to talk to one.

 [1] Attribution: John Patrick, February 2014 at dailyinfographic.com


Author: Gary Ayre, Partner of nem Australasia.
This article is based on research and opinion available in the public domain.